Exxon-Mobil's first quarter earnings of $10.7
billion are up 69 percent from last year. That's the most profit the
company has earned since the third quarter of 2008 -- perhaps not
coincidentally, around the time when gas prices last reached the lofty
$4 a gallon.
This gusher is an embarrassment for an industry seeking to keep its
$4 billion annual tax subsidy from the U.S. government, at a time when
we're cutting social programs to reduce the budget deficit.
It's specially embarrassing when Americans are paying through their noses at the pump.
Exxon-Mobil's Vice President asks that we look past the "inevitable
headlines" and remember the company's investments in renewable energy.
What investments, exactly? Last time I looked Exxon-Mobil was
devoting a smaller percentage of its earnings to renewables than most
other oil companies, including the errant BP.
In point of fact, no oil company is investing much in renewables --
precisely because they've got such money gushers going from oil. Those
other oil companies also had a banner first quarter, compounding the
industry's embarrassment about its $4 billion a year welfare check.
American Petroleum Industry CEO Jack Gerard claims the gusher is due to the "growing strength in our economy."
Baloney. If you hadn't noticed already, this is one of the most
anemic recoveries on record. $4-a-gallon gas is itself slowing the
economy's growth, since most consumers are left with less money to spend
on everything else.
Gerard then claims the giant earnings "reflect the size necessary for
[American] companies to be globally competitive with national oil
companies" around the world.
Let's get real. The crude oil market is global. Oil companies sell
all over the world. The price of crude is established by global supply
and demand. In this context, American "competitiveness" is meaningless.
Republicans who have been defending oil's tax subsidy are also
finding themselves in an awkward position. John Boehner temporarily
sounded as if he was backing off -- until the right-wing-nuts in the GOP
began fulminating that the elimination of any special tax windfall is to
their minds a tax increase (which means, in effect, the GOP must now
support all tax-subsidized corporate welfare).
Boehner is now trying to pivot off the flip-flop by reverting to the
trusty old "drill, drill, drill" for opening more of country to oil
drilling and exploration. "If we began to allow more permits for oil and
gas production, it would send a signal to the market that America's
serious about moving toward energy independence," he says.
This argument is as nonsensical now as it was when we last faced
$4-a-gallon gas. To repeat: It's a global oil market. Even if 3 million
additional barrels a day could be extruded from lands and seabeds of the
United States (the most optimistic figure, after all exploration is
done), that sum is tiny compared to 86 million barrels now produced
around the world. In other words, even under the best circumstances, the
price to American consumers would hardly budge.
Whatever impact such drilling might have would occur far in the
future anyway. Oil isn't just waiting there to be pumped out of the
earth. Exploration takes time. Erecting drilling equipment takes time.
Getting the oil out takes time. Turning crude into various oil products
takes time. According the federal energy agency, if we opening drilling
where drilling is now banned, there'd be no significant impact on
domestic crude and natural gas production for a decade or more.
companies already hold a significant number of leases on federal lands
and offshore seabeds where they are now allowed to drill, and which they
have not yet fully explored. Why would they seek more drilling rights?
Because ownership of these parcels will pump up their balance sheets
even if no oil is actually pumped.
Last but by no means least, as we've painfully learned, the environmental risks from such drilling are significant.